Book reviews NORTH SEA OIL IN THE FUTURE

by C. Robinson and 3. Morgan

216pp, £10.00, Macmillan for the Trade Policy Research Centre, London, 1978

It is difficult to avoid the conclusion that this is a disappointing book. Professor Robinson and Dr Morgan have recently finished a two year study of the economics of North Sea oil and presumably this book is intended to be the final report of that study, particularly as Dr Morgan has now moved to the British National Oil C o r p o r a t i o n . As such, it is disappointing for two main reasons. First, it appears to have been written very quickly, with a number of inconsistencies and a strange choice of subject. For example, the government's participation policies and the role of the British National Oil Corporation - two major issues - are hardly mentioned, whereas a possible depletion policy is discussed at great length. Second, the book is little more than a compilation of earlier articles by the authors, and there is little new for anyone who has followed closely their previous work.

Professor Robinson and Dr Morgan represent the right wing of British academics interested in the North Sea and to a large extent the book is a strong plea for a return to free market operations unhindered by government interference. Thus the focus is a critical assessment of government policies insofar as they affect the profitability of oil company operations, in much the same vein as Professor Robinson's earlier writings on the coal industry. One of the main conclusions is that 'the range of weapons now available to a determined Government is formidable and ministerial power is subject to minimal checks. It is not obvious that the regulatory system has arisen from public demand or from economic logic.'

In part this political stance detracts from the merits of the book; in part it is an asset. An example of the former is

the way in which a good review of the evolution of the depletion legislation is marred by political bias; an example of the latter is the excellent discussion of licensing policy and the arbitrary decisions of the civil servants involved.

The analytical core of the book is chapters III-VI which look at the main determinants of supply and profitability. The starting point is a 'surprise-free' projection which is used as a benchmark against which to test the effects o f va r ious a l t e rna t ive assumptions. This approach is very commendable and the various alternatives are examined with great thoroughness and clarity. The draw- backs in making generalizations are shown clearly, given the disparity in field reserves and costs. Nevertheless, useful indications are given of the price inelasticity of production, field profitability and government revenues.

This section of the book is excellent and 1 would make only three small criticisms: in the chapters on taxation it is surprising that there is no reference to the extensive work of Alex Kemp; there seems little point in including the few

pages on Norway; and there is some confusion between exploration and appraisal drilling which affects later calculations.

Where the book goes wrong is in the authors' belief that all they needed to do to their earlier papers was to update the figures, add a few linking sections and a concluding chapter. The coverage is therefore determined largely by the concerns of their research study, which by its na ture could not be comprehensive. Some crucial issues need much more work - for example, the debate on discretionary licensing versus competitive bidding. Where the authors have done the work their policy conclusions are well argued and worth detailed consideration, but in other aspects supporting evidence is missing. The result is an unbalanced piece of work, the best parts of which show clearly that Professor Robinson and Dr Morgan could have done much better.

G~4. Mackay University of Aberdeen

Aberdeen, UK

ENERGY POLICIES AND PROGRAMMES OF lEA COUNTRIES: 1977 Review

International Energy Agency

333pp, $24.00, £1 I. 75, OECD, Paris, 1978

ANNUAL REPORT ON ENERGY RESEARCH, DEVELOPMENT AND DEMONSTRATION: Activities of the lEA 1977-78

67 pp, OECD, Paris, 1978

The International Energy Agency, grafted on to the Organisation for E c o n o m i c C o - o p e r a t i o n and Development following the momentous discussions at Detroit during the 1974 World Energy Conference, has just produced its first reports. One is the first annual report on energy RD&D. The

second, much larger, is a series of reviews of national energy programmes. It is hard indeed to differentiate between either their purpose or the facts reported in these two volumes.

An energy researcher looking for data now has a wide choice, and were it not for the strong likelihood that each of the authorities producing international statistics copies from the other, there would be more confusion than there is. It is bad enough when one authority takes AD 2000 for its target datum and another AD 2020. confusion becomes confounded when some urban consumptions, for instance, are considered too small to consider - thus arriving at figures for combined heat and power, for example, that are meaningless when compared with established totals.

The difference between inexperienced and incomplete statistical gathering is most marked when someone with even

342 ENERGY POLICY December 1978

less experience takes such data as the new IEA information and attempts to draw global or even industry-wide conclusions. The most serious omissions from these data are those of France and the USSR. Cross-totalling is wholly misleading, revealing only when it comes to evaluating the research effort of the 19 participating countries (20 including the EEC), frustrating when comparison totals are either missing or have to be sought elsewhere in contexts that are not strictly comparable, or at least suspect.

To obtain a helpful picture from these two publications it has to be understood how it was intended they should differ. The Annual Report is more a sketchy outline of effort with very brief notes on individual research - or demonstration - projects. If there is a distinction be tween d e v e l o p m e n t and demonstration in practice this report does little to mark the line - one man's development is another country's demonstration. To the regret of the IEA, some countries have yet to wake up to the necessity for local development.

Batting Order

If the Annual Report concerns itself with R D & D as it is, the Review volume concerns itself with R D & D as it might be - assuming that energy research is the name of the statistical game for which some countries have not yet provided themselves with the bat to go with the ball. If there were more difference between R D & D and an energy programme, there would be less confusion between these two volumes. If the energy dilemma - crisis if you wish - had been sharper or perhaps more prolonged than it has yet been, we would be discussing a volume of national energy policies. It is only a change of term; policies it should be, even must be, notwithstanding the presence or absence of research.

In that light one has to ask whether these energy programmes are reviewing energy (fuel) acquisition policies or energy-conversion/fuels-use policies. Niether really makes sense unless the two become a single entity, coordinated and integrated.

Adopting such a viewpoint throws not only a cruelly blinding light on the

capability of more than half the O E C D nations, it shows up the IEA as a critical pedagogue crying for more effort without offering any better educational timetable than an average achieved by the students. Where is the measure, the ideal form or pattern, the norm below which the better off will help the indigent, the helpless will be entitled to ask for aid? Is it not there, one suspects, because the professor is too new to his chair, is still feeling his way.

Critical reviews

The most valuable feature of the Review volume is the series of donnish critical surveys in the annex on basic issues. The preamble sets out in various sections: R & D policy and objectives (where confusion with the Annual Report on R D & D is inevitable); govern- ment energy R & D programmes and budgets; organizations for establishing and implementing energy R&D policy; measures to facilitate development of new techniques and their application by industry; support for IEA R D & D cooperative programmes. Ignoring the suspiciously theoretical character of these groupings it is possible to find extremely illuminating comment by the people who have done the leg work.

Rapporteurs (seldom less than two, sometimes a committee of four) have examined Austria, Belgium, Canada, Denmark, Germany, Greece, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, Turkey, the UK and the USA. The cross-examinat ion is interesting - practicality, sympathy, even competence may be reflected in the juxtaposition. In the case of Austria the tutors are from Denmark and Germany; in the case of Belgium, from Norway and New Zealand; those for Greece are from Spain and Austria, and for the Netherlands, from the UK and Turkey. Denmark may have had, one suspects, special reason for attracting comment by duplicate reporters, two from the UK and two from Canada.

In some reports no feelings are spared, while in others the lack of sharply pointed questions is notable. At the hands of P. de Meester of Belgium and G. Leman of Sweden (taskmasters from countries acutely aware of their

Book reviews

energy fates), Turkey suffers the harsh but perhaps not unjustified comment: 'information available in a written form as well as a short oral examination make it very difficult to arrive at a true picture of the statistics in Turkey. '

The 'oral ' bit suggests a visit to Turkey; one could hope that all these reports were written from equally first- hand observation. Messrs Mortensen of Norway and Graham of New Zealand observe that Belgium has an R&D programme ' . . . [that] seems too passive and small ... more important [sic] budgets should be allocated ... if significant results are to be attained ... The level of research on alternative energy sources should be increased'. There would be benefits, they say, from better cooperation with industrial R&D efforts.

Sweden's state is revealed by two Japanese and one Italian. They seem largely baffled by the uncertainties involved in Sweden's change of government and lack of clearly expressed new policies. Of work done, rather than projected, the invigilators are satisfied: ' . . . a comprehensive programme ... objectives are well defined'. It is not clear whether reference to the balancing of resources with activities in R&D and projections of future nuclear policy, together with full coordination among 'various institutions included in energy R&D' is hope or criticism. The uncertainty could be due to a reluctance to compare a large degree of real competence and achievement with a set of unproven theoretical averages.

Common ground?

It is impossible to separate these comments from consideration of the Annual Report, where it would seem they really belong. It is in the Annual Report one has to look for any survey of effort by subject. Incidentally, the Review volume has no index, glossary or separate list of credits - it is extremely difficult to make extracts and be certain they are comprehensive.

In the case of the Annual Report 's table of R D & D projects, where some totalling is possible, there is no cross- reference to the Review volume or vice versa. One can only hope that there is common ground and no conflict

ENERGY POLICY December1978 343

Book reviews/Publications received

between compilers. This chart lists some 130 p~oject investigations by 20 countries divided into 11 major categories. The most duplication - by 16 countries - is in one aspect of solar energy conversion, and the least in four categories, where but two countries are each investigating urban planning, Wiehl/Esslingen (whatever that may mean), low Btu coal gasification and coal hydrogenation.

The most practical effort of the IEA towards a new era of energy sufficiency is the appointment of 'operating agents' for demonstration work - presumably the stage beyond development. There are now no fewer than 36 for the 130 projects so classified - spread over nine of the twenty nations. The USA and the UK each have eight, Sweden and Japan three each, Germany a surprising nine and Denmark a mere one.

Cascading confusion

Looking down the classified list of projects for evidence of significant activity, or lack of it, there is what at first seems an important omission. 'Cascading' may mean the same thing as combined heat and power, but does it mean district heating? There is no other reference to this technology, a vital one if the major factor in energy conversion is to be recognized and is to have any significance in energy-use (fuels-use) policies,

To an engineer, acutely sensible of the ultimate physical work that has yet to be planned for, the omission of

district heating from this list is extremely disturbing. The technology is certainly well established, but there are differences of opinion on operating temperatures (should they be low enough for the use of plastic pipe, for instance) and methods of waterproofing u n d e r g r o u n d ne tworks . The thermodynamics , the need, or otherwise, for maximizing electricity output at the expense of heat (or vice- versa), the use of back pressure or pass- out turbines, and the real value/cost of topping with M H D / g a s turbine additions, are all questions that not only require answers, but need basic mechanical and civil engineering, electronic control and, acutely, measurement research. In almost all these areas accelerated research which would show immediate cash returns is starved of funds.

There is, however, a page in the Annual Report devoted to an explanation of 'cascading' , which hardly clarifies the situation and which, incredibly, makes no mention of heat distribution, its achievements and remaining difficulties. However, in the larger Review volume there is a reference of greater significance. On page 34 we read:

There is considerable uncertainty as to the future use of electricity for space heating purposes. When electricity generation is based on fuels such as nuclear and coal, and hydro, this is a way of substituting for oil. There are, however, more energy efficient ways o f space heating, eg in densely populated areas district heating with

combh~ed production of heat and power, or heat pumps ... District heating, together with combined production of heat and power, could be used as an important tool for both energy conservation and oil substitution in many Participating Countries. It has, however, received significant government attention, incentives or encouragement in only a few Participating Countries.

The italics above are mine. There is deliberately no emphasis on heat pumps, a view of the practical value of these machines that is being shared by others - use strictly limited by essentially confined circumstances, mainly those where the temperature of the heat source is not only constant for the full yearly - or operational - cycle but is also close to that required for the sink (probably no more than 10-15 deg C above an ambient temperature not lower than 5-10°C).

In the paragraphs quoted there is room for hope that the basic message will be heard and understood, particularly within the IEA where much good work can be done. The lEA may well be doing much of the background work needed by the EEC - where the combined heat and power concept has not yet come to fruition but where there is the mechanism, goodwill and funds not just for demonstration projects but for large-scale heat distribution and concomitant, sensible and significant energy savings.

Norman Jenkins Farnham

Surrey, UK

Publications received An Australian Conservation o f Energy Program, National Energy Advisory Committee, Report No 1 (Department of National Development, Australian Government Publishing Service, Canberra, 1978, 14 pp).

A Research and Development Program for Energy, National Energy Advisory Committee, Report No 3 (Department of National Development, Australian Government Publishing Service, Canberra, 1978, 18 pp).

Australia's Energy Resources: An Assessment, National Energy Advisory

Committee, Report No 2 (Department of National Development, Australian Government Publishing Service, Canberra, 1978, 107 pp).

Coal in the US Energy Market: History and Prospects, Richard L. Gordon (Lexington Books, Farnborough, Hants, 1978, 224 pp, £ 17.00). Attempts to survey the history and prospects of the US coal industry. Recognizes two basic problems in energy economics: the enormous uncertainties about world energy resource endowments and prospective technological progress, and the pervasive role of public policy in

influencing coal production and use. Chapters on: the problems of appraising coal economics; the history of US coal consumption patterns; forecasting coal consumption; the economics of coal production and distribution; the economics of coal utilization; scenarios of electric utility fuel use; summary and conclusion.

Coal Resources: The Full Reports to the Conservation Commission o f the World Energy Conference, W. Peters, H.D. Schilling, E. Pickhardt, D. Wiegand and R. Hildebrandt (IPC Science and Technology Press, Guildford, 1978, 152pp, £12.00, $31.20). One of a series of Study Group Reports produced for the Conservation Commission of the World Energy Conference. This unique set of reports includes the first collection of views of the world's main practitioners in the energy field on prospects

344 ENERGY POLICY December 1978